Used car market ‘on track for a record year’

Dealers are confident their used car sales will grow in 2018, a new survey from automotive data experts Cap HPI has found.

Used car sales set a new record in March, with 728,525 vehicles changing hands – up 6% on the same month in 2016.

James Dower, senior Black Book editor at Cap HPI, will provide an end-of-year round-up, explore issues and opportunities into 2018 and disclose further findings from the survey, when he takes to the stage at Automotive Management Live at the Birmingham NEC on November 9.

It is only the second time since 2004 that the used market has passed 700,000 vehicles in March, while total used volumes passed 3.3 million between January and the start of June, an increase of 0.1% on 2016.

Dower said: “Motor retailers are increasingly turning to used vehicles to support margins. To date, strong demand has helped to support stable prices in 2017. If the current trend continues, we will see a record year for used car sales.”

When asked in June to predict the UK new car registrations total for the second half of this year, 86% of dealers said they expected them to fall from the 1,272,150 registered in July to December last year.

Dealers were more optimistic when it came to used cars – when asked how they would fare compared with last year’s second half sales of 3,770,400, 47% expect to exceed it, 26% expect it to be roughly the same and 26% thought they would sell less.

The used market exceeded 7.7m vehicles in 2016, beating the 2015 figure of 7.2m and the previous 2004 record of 7,731,609 vehicles.

“Both new and used enjoyed a record year in 2016, so a decline in new car registrations in 2017 needs to be looked at in context against a strong year and seven years of successive growth.”

Dealers continue to pre-register vehicles, with 61% saying they expect to do so as part of a tactical decision to hit manufacturer targets.

Dower added: “New car registrations are currently being driven by business, fleet and rental, with private registrations in decline.

“Pre-registration will continue to take place and three fifths of dealers say it will still account for a significant number of 2017 new car registrations. The impact of pre-registration was felt in 2016 and that is not going away this year.”

Dealers will also need to prepare for the return of potentially large numbers of vehicles funded through PCP.

“We may see large numbers of three-year-old stock returning to the market in Q4,” said Dower. “This could put pressure on prices and erode margins.”

Finally, 31% of dealers expect more consumers to fund new car through finance this year than 2016. However, they expect even greater growth in used, with 44% confident of more used car funding compared with 2016 figures.

James Dower joined Cap HPI in May 2016 and is responsible for the production of black book valuations, managing the team of seven editors. With more than 27 years’ experience within the motor industry, he has worked within motor retail – from volume brands to high-end prestige, motor finance and most recently as sales and marketing manager for a vehicle remarketing company.